Adap.TV does much the same thing, but with video ads instead of banners.

The nice thing about video ads is that marketers are willing to pay much higher rates for them.

This is a very big bet for AOL CEO Tim Armstrong because these days, $400 million is a lot of money for AOL. It only had ~$470 million in cash laying around prior to doing this deal.

The deal is $322 millin in cash, and $83 million in stock.

AOL put out a release explaining its deal.

Here it is:

We have agreed to acquire Adap.tv for $405 MM, here is what Adap.tv brings AOL:

The only complete global programmatic video stack for publishers and advertisers across all screens;

A unified yield management platform for advertisers and publishers for planning, targeting, ad-serving and measurement;

One of the fastest growing platforms on the internet, with global revenue growth in excess of 100% per year in each of the last three years;

Wide adoption by the largest global advertisers and publishers, including 83 out of the Ad Age 100 and 70 of the comScore 100;

A talented team which has driven innovation in the automation of global video advertising.

NEW YORK, Aug 07, 2013 (BUSINESS WIRE) -- --Combination of AOL On Network and Adap.tv Will Create the Most Powerful Cross-Screen Solution for Brands, Agencies and Publishers

AOL Inc. AOL+2.20% today announced it has entered into an agreement to acquire Adap.tv, Inc., a leading global, programmatic video advertising platform for the world's largest brands, agencies, and publishers.

Adap.tv brings to AOL:

-- The only complete global programmatic video technology stack for publishers and advertisers across all screens;

-- A unified yield management platform for advertisers and publishers for planning, targeting, adserving and measurement;

-- One of the fastest growing platforms on the internet, having grown global revenue over 100% per year in each of the last three years;

-- Wide adoption by the largest global advertisers and publishers, including 83 of the Ad Age 100 and 70 of the comScore 100; and

-- A talented team which has driven innovation in the automation of global video advertising.

The combination of AOL On and Adap.tv will give AOL a unique end-to-end solution and video stack for publishers and advertisers - from premium original production, to content aggregation and syndication platforms, robust video CMS technology, and now a leading programmatic video platform.

The strength of Adap.tv's comprehensive platform and team has enabled its rapid expansion, resulting in a large and growing customer base of publishers and advertisers. In 2012, Adap.tv supported more than 26,000 global ad campaigns, which ran on approximately 9,500 websites and was used by many top brand advertisers.

AOL has invested heavily in the digital video space by focusing exclusively on premium content and premium publishers. This investment has propelled the AOL On Network to No. 2 in monthly content video views in the U.S. for nine of the last 12 months*.

"AOL is a leader in online video and the combination of AOL and Adap.tv will create the leading video platform in the industry," said Tim Armstrong, Chairman and Chief Executive Officer of AOL. "The Adap.tv founders and team are on a mission to make advertising as easy as e-commerce and the two companies together will aggressively pursue that vision.

"Two trends are prevalent in the video space right now - the movement from linear television to online video and the shift from manual transactions to programmatic media buying. Adap.tv is positioned squarely in front of the huge opportunity these trends are presenting," said Armstrong.

"At Adap.tv, we are focused on building the most important business within the most important category in digital advertising," said Amir Ashkenazi, CEO, Adap.tv. "We believe that most TV advertising will soon be traded programmatically on platforms like ours. The combination of AOL and Adap.tv accelerates our vision of efficient and effective TV and video advertising."

Adap.tv will operate independently as part of AOL's video organization which is led by Ran Harnevo, SVP, Video, and be included as part of the overall solution offered by AOL Networks to its publisher and advertiser partners. AOL Networks, under the leadership of recently named CEO Bob Lord, partners with leading publishers, advertisers and agencies seeking to maximize the value of their online investments. AOL Networks brands include Advertising.com, The AOL On Network, Be On, ADTECH and Pictela.

The purchase price will total $405 million in aggregate and will be comprised of approximately $322 million in cash consideration, and approximately $83 million in AOL common stock, subject to certain adjustments. The closing is subject to customary closing conditions, including expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The boards of directors of both companies have approved the transaction, and the stockholders of Adap.tv have approved the transaction. AOL expects to close the acquisition in the third quarter of 2013.

* comScore, Content only videos (Total number of streams or progressive downloads initiated by viewers)